“If the ban continues, we’ll need more ore from the
Philippines and New Caledonia,” said Toru Higo, general manager
of nickel sales and raw materials at Japan’s top producer.
Indonesia banned exports of 14 raw minerals effective May 6,
with an exception for miners that plan to build local processing
facilities, Energy and Mineral Resources Minister Jero Wacik
said. The miners will be taxed 20 percent on ore shipments.

Nickel, used to strengthen stainless steel, has fallen 10
percent this year, extending last year’s 24 percent loss on
slowing demand in China and concern over Europe’s debt crisis.
Indonesia’s 20 percent tax on ore exports will boost prices in
the mid-term, while large stockpiles in China will limit short-term impacts, China International Capital Corp. said on May 8.

“The ban may increase costs for securing raw materials,”
said Syusaku Nishikawa, a Daiwa Securities Capital Markets
analyst. This may also force producers in East Asia to cut
output, tightening global supplies, he said.

‘Cut Production’

Sumitomo sees “little impact” near term as it has
stockpiles and other suppliers, Higo said in an interview
yesterday. “If it gets worse, the new rules will force some
producers to cut production.”

Nickel for three-month delivery in London fell 1 percent to
$16,820 a metric ton at 3:43 p.m. Tokyo time. The metal is the
worst performer this year on the London Metal Exchange.

China boosted imports of bauxite and nickel ore to build
stockpiles before Indonesia, its largest supplier, curbed
shipments, Barclays Capital said April 23. China and Russia were
the biggest producers of refined metal in 2010, according to
London-based metals consultant CRU.

China’s nickel ore imports jumped 73 percent to 3.67
million tons in March from a year earlier, data from the
Beijing-based Customs General Administration showed April 23.

Philippines, New Caledonia

Japan imported 3.65 million tons of ore in 2011, according
to finance ministry data. Indonesia supplied 1.95 million tons,
or 53 percent, followed by New Caledonia with 27 percent and the
Philippines with 19 percent, the data showed.

Sumitomo Metal will produce 41,000 tons of electrolytic
nickel and 22,200 tons of ferronickel in the year started April
1, little changed from a year earlier, it said April 2.

Pacific Metals Co., Japan’s top ferronickel producer,
spokesman Kosuke Naradate said the company was still trying to
collect more information about the ban.

The Indonesia Mining Association estimated in March that
the ban will cut nickel-ore and bauxite exports by as much as 75
percent this year. Indonesia shipped 33 million tons of nickel
ore and 40 million tons of bauxite last year, according to
Syahrir Abubakar, the group’s executive director.

The tax on miners is unlikely to affect prices in the near
term because China has been stockpiling and will find material
elsewhere in the coming months, Morgan Stanley said in a report
on May 14. China’s nickel pig iron producers source just over
half of their ore from Indonesia, the bank said.